Competition Appeal Tribunal dismisses the appeal of Colt Technology Services on all Grounds

November 2013

On the 26 November, the Competition Appeal Tribunal (“CAT”) published its Judgment regarding the appeal of Colt Technology Services (“Colt”) against Ofcom’s decision not to impose passive remedies that would allow communication providers to gain access to BT’s physical infrastructure to provide business connectivity services.

As part of the most recent Business Connectivity Market Review (“BCMR”), published on 28 March 2013, Ofcom found BT to have significant market power (“SMP”) in various business connectivity markets outside of the more competitive ‘WECLA’ (Western, Eastern and Central London Area). As a remedy, Ofcom applied remedies in regard of ‘active’ services. However, Ofcom decided not to mandate ‘passive’ access – such as access to BT’s ducts and poles – as, in its view, such remedies would be unlikely to lead to better market outcomes than the package of remedies already being proposed, and in some cases could lead to worse outcomes for consumers and competition.

Colt appealed against Ofcom’s decision on a number of grounds. However, after a four-day hearing between 14 and 17 October 2013 in which the CAT heard evidence from Colt, Ofcom and BT (as an intervener in the case), the CAT has now published its Judgment unanimously dismissing Colt’s appeal.

In coming to its decision, contrary to the views of Colt, the CAT considered that:

Ofcom had not considered active and passive remedies as necessarily alternatives rather than complementary remedies as a matter of principle. Ofcom clearly set out its provisional views on passive remedies and considered the benefits and costs of passive remedies, as well as consulting with stakeholders regarding the role of passive remedies would have in promoting downstream competition and the possible implications for the effectiveness of existing active remedies. There was no internal fait accompli;

Ofcom did not hold any de facto prejudice or presumption regarding the use or otherwise of passive remedies and simply considered whether such remedies would be beneficial or not;

When assessing the relative merits of active and passive remedies Ofcom had asked itself the right question and based its analysis on appropriate and relevant material. Ofcom did not err in its assessment of whether active remedies could achieve the same benefits as passive remedies and in ultimately deciding not to adopt passive remedies. In coming to its decision, Ofcom followed an open and fair consultation process and took account of the responses it received making clear its objectives and concerns.

When considering the factual evidence regarding any CP’s intention to invest substantially in infrastructure based on passive remedies, Ofcom did not err in its assessment by concluding that there was not enough evidence to justify the adoption of passive remedies. The lack of evidence reinforced Ofcom’s overall decision but was not the sole reason for coming to the decision not to impose passive remedies. Therefore, even if Ofcom was wrong to conclude that there was no evidence, this would not mean the decision itself was wrong.

DotEcon provided an Expert Report in support of BT’s case and Dr Dan Maldoom gave evidence during the hearing.

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